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CFTC charges Lloyds over LIBOR manipulation

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The US CFTC has issued an order against Lloyds Banking Group and Lloyds Bank, bringing and settling charges for acts of false reporting and attempted manipulation of the London Interbank Offered Rate (LIBOR) for Sterling, US Dollar and Yen.

The order finds that, in a few instances, Lloyds TSB was successful in its manipulation of Sterling LIBOR and Yen LIBOR. The CFTC also brought and settled charges that Lloyds TSB, at times, aided and abetted the attempts of derivatives traders at Rabobank to manipulate Yen LIBOR.
The order requires Lloyds Banking Group and Lloyds Bank to pay a USD105 million civil monetary penalty, cease and desist from their violations of the Commodity Exchange Act, and to adhere to specific undertakings to ensure the integrity of LIBOR submissions in the future. 
“By today’s action, Lloyds is being held accountable for serious misconduct,” says Aitan Goelman, CFTC director of enforcement.  “The CFTC remains committed to taking all actions necessary to ensure the integrity of the markets we oversee.”
The unlawful conduct of Lloyds Banking Group and Lloyds Bank undermined the integrity of LIBOR, a critical global interest rate benchmark that is the basis of trillions of dollars of financial instruments.  The CFTC order finds that Lloyds Banking Group and Lloyds Bank, through Lloyds TSB and HBOS, attempted to manipulate LIBOR, at times successfully, to benefit cash and derivatives trading positions.  The order also finds that HBOS altered and lowered its Sterling and US Dollar LIBOR submissions to protect its reputation at the time HBOS was being acquired by Lloyds Banking Group. 
In a related action, the US Department of Justice (DOJ) entered into a deferred prosecution agreement with Lloyds Banking Group, deferring criminal wire fraud charges in exchange for Lloyds Banking Group continuing to cooperate and agreeing to a USD86 million penalty.  In addition, the UK Financial Conduct Authority (FCA) issued a final notice regarding its enforcement action against Lloyds Bank and Bank of Scotland plc (a subsidiary of HBOS) and imposed collectively on both firms a penalty of GBP105 million (approximately USD179 million).

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